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02 April 2020

What Are Peer-to-Peer Payments

Peer to peer (P2P) payments, in simple terms mean, transfer of money taking place online from one party to another.

The transfer take place as a result of linked bank accounts or credits associated with wallets of both sender and receiver.

The popularity of a peer to peer payment app could be known from the fact that P2P is a billion dollar industry currently with no signs of stopping down due to a host of online wallets present today.

It all started from PayPal, the first and still most widely used peer to peer (P2P) payment service making international money transfer easy, and now with so many service providers in the market, there have been a sudden boom in P2P apps whether be iOS or Android.

Simple Working Model behind P2P


It is relatively easy to deal with a peer to peer payment service wherein you need to create a free account to start off with things and link your bank account as well as cards to your free account for sending or receiving money.

You might be prompted for verification or passwords to make things secure and out of reach for the hackers.

Once you are inside your account, you can find out other users via their username, phone number, or email, to make the transfer more easier than ever through a simple tap.

Sending and receiving money via such a service is a simple P2P app development process with just a couple of taps to follow and payment transfer taking place in a matter of days.

The apps will have your money stored depending on whether you want to use it for transactions or want to withdraw the same into your bank account.


Time and Money to invest in P2P


It is very important to be patient with the money transfer taking place for 2-3 days before it finally reflects as debit and credit in sender’s and receiver’s bank account while some wallets do the transfer fast and instantly in just a matter of minutes due to optimised payment app development.

When transfer taking place across international borders, it surely comes at a fee that is a small percentage of the overall transfer amount.

The transfer fee can hit real hard if the transferred payment is real big with even 2-3% appearing to be a huge sum of money across wallets.

While going for the money sending or receiving process, ensure that at every stage you are entering details correctly, especially the payment details, since even a difference of a digit can cost big time and hence it is critical to cross check the details multiple times.

Benefits with Peer to Peer Model


The best part about digital payment solutions is it really fast since you can get the money transfer or receiving done within no time that can help in initiating projects right away, prior on hold due to the wait for an advance payment.

Other than that it is so convenient to send and receive money online that directly gets debited from or credited to your cards or bank accounts without you needing to visit the branch.

Another important benefit is the ease of use of a peer to peer (P2P) payment service across all age groups, which even a child or an elderly person can do it with ease whenever required, rather than cheques, demand drafts, western union money transfer, wire transfer, or other complex ways of sending money.

It is just as easy as taking out money from an ATM wherein there is no intermediary to make or break your transaction keeping you away from the headache of signing cheques or slips.

You might be charged a small percentage fee but when you look at the broader picture than you would understand that peer to peer payments do have some expenses to cover which they charge in the form of flat percentage fee, while there are some others who charge nothing from you for sending or receiving money.

The craze of peer to peer payments can be known from the fact that more than half of American millennials are using P2P apps currently for money transfer.

Loopholes with Peer to Peer Model


There is no doubt about the fact that most P2P transactions are highly secured with P2P services using best in class algorithms in wallet app development to ensure fool proof safety from intruders.

However, sending money online is surely a risky thing to do always since money is transferred virtually in an intangible manner and hence data breach is always a fear to beware of.

A major problem with mistaken transaction or fraudulent activity is getting refund is one heck of a headache, especially when you are highly dependent on P2P apps for day to day transactions.

Hence, the 2-factor verification security plays a key role in keeping eavesdroppers at bay, with a one time password (OTP) authorising a transaction and hence the chances of fraudulent transactions gets almost nil.

You can play a vital role in cutting down the risks to a large extent by performing transactions only with familiar people or people whom you know.

As we see there are certainly some disadvantages involved but they can’t empower the advantages considering that now you have powerful encryption algorithms in place and a number of advantages offered by P2P payment services.

Author Bio:

Nikunj Gundaniya, Product manager Digipay.guru, one of the leading digital wallet app development company USA, which provides mobile finance application development services.
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